Silver wrapped up a record-breaking week after its price surged to an all-time high of $64.6 per ounce, driven by supply concerns, strong investor demand, and robust industrial usage.
Precious metals have been on an upward trend in recent months, with silver standing out for its sharp gains. The metal rose more than 10% last week, gaining 13.5% since the end of November and more than 120% compared with the end of 2024.
Market analysts attribute the rally to growing concerns over limited supply, rising investment demand, and silver’s extensive use in industrial applications. Like gold, silver is seen as a safe-haven asset during periods of geopolitical tension or financial instability, but unlike gold, it also benefits heavily from industrial demand.
Expectations that the U.S. Federal Reserve will end this year with three interest rate cuts, followed by further easing next year, have also provided strong support for silver prices. Lower interest rates reduce the opportunity cost of holding precious metals.
Silver is widely used in jewelry and coins, as well as in electronics, solar panels, and other industrial sectors. Unlike gold, however, silver is mostly produced as a byproduct of other metals, making it difficult for miners to quickly respond to rising demand.
Tariff Concerns Add to Supply Strains
Concerns that the United States could impose tariffs on silver have also influenced prices. In recent months, fears of potential U.S. import duties led to the accumulation of large silver stockpiles in the country, worsening the global supply shortage.
The U.S. decision earlier this year to add silver to its list of critical minerals further fueled the price rally. While the country is already among the world’s leading silver producers, its inclusion on the critical minerals list underscored silver’s strategic importance.
Under the U.S. “Section 232” framework, a review of critical minerals is expected to be published in the coming weeks. The review is anticipated to signal potential tariffs on silver and other commodities traded in global markets.
Retail investor demand, particularly in North America, has also increased. Silver is often referred to in the region as the “poor man’s gold,” making it a popular alternative investment.
In addition, India’s pension regulator recently allowed investments in gold and silver for the first time, supporting gains across precious metals. Under the National Pension System, funds will be permitted to allocate up to 1% of assets to approved gold and silver exchange-traded funds (ETFs). Earlier this year, China also allowed insurance companies to allocate up to 1% of their assets to gold.
Industrial Demand Drives the Market
Ole Hansen, Head of Commodity Strategy at Saxo Capital, told Anadolu Agency that central bank policies have played a key role in silver’s rise. “Low interest rates reduce the opportunity cost of holding precious metals, and the Fed’s return to rate cuts in 2025 has been an important support for silver,” he said.
Hansen added that a weaker U.S. dollar has further boosted silver and gold by making them more attractive to investors outside the United States. He emphasized that around 58% of global silver demand comes from industrial applications.
He also noted that silver inventories in warehouses linked to the Shanghai Futures Exchange have recently fallen to their lowest levels since 2015, while silver lease rates in London remain elevated—both classic indicators of supply tightness.
Strong jewelry demand in India, partly driven by consumers shifting away from relatively expensive gold, has added further pressure on silver supply, Hansen said.
Meanwhile, Hamad Hussain, Climate and Commodities Economist at Capital Economics, said that the silver market’s long-standing supply deficit and ongoing U.S. tariff risks remain key factors supporting prices.
However, Hussain cautioned that the pace and scale of recent price increases largely reflect positive investor sentiment toward precious metals. “If investor sentiment shifts over the next 12 months, silver prices face a high risk of a sharp correction to $40–45 per ounce,” he said.
Source: Anadolu Ajansı/ Prepared by: İlayda Gök